EIB uses blockchain for Climate Awareness Bond.

The European Investment Bank (EIB) has issued a blockchain-based digital bond that uses environmentally incentivized node infrastructure. The financial institution announced the launch of a ‘digital native green bond’ denominated in Swedish krona, offering a fixed rate of 3.638% over two years to institutional investors. The Climate Awareness Bond is being touted as the first blockchain-based bond to be registered on the Luxembourg Stock Exchange Securities Official List and displayed on the Luxembourg Green Exchange. The bond operates on the recently launched sustainable blockchain digital bond platform So|bond, which allows issuing, trading, and settlement of digital bonds using pro-environmental incentives for its node operators.

The Proof of Climate Awareness protocol incentivizes nodes to reduce the environmental impact of their infrastructure by remunerating nodes according to a formula linked to their climate impact, with lower impact ratings resulting in higher rewards. The protocol was developed by French-based IT provider Finaxys, while So|bond itself is a joint project operated by Skandinaviska Enskilda Banken (SEB) and Credit Agricole CIB.

The EIB hopes that this first-ever green and SEK-denominated bond will harness blockchain technology to move towards more sustainable financial systems. The head of sustainable DCM at SEB, Ben Powell, added that blockchain technology adoption has been ‘restrained’ by perceptions of high energy consumption in recent years. So|bond aims to address the environmental impact of financial infrastructure by using technology that has typically been criticized for its carbon footprint.

Cointelegraph has reached out to EIB to ascertain finer details of the bond and its prospective institutional buyers. The EIB has been exploring the use of blockchain-based platforms for digital bonds over the past three years. News of a potential EIB issued Ethereum-based digital bond sent ETH to all-time highs in April 2021. The institution then settled a euro-denominated 100 million ($103.7 million) digital bond on a private blockchain platform in collaboration with Goldman Sachs and Société Générale Luxembourg.

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